Animal Nutrition & Health: driving growth & value

A. Ruy FreirePresident Animal Nutrition & HealthDSM Nutritional Products

Capital Markets Days 2012

Safe harbor statement

This presentation may contain forward-looking statements with respect to DSM’s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DSM has no obligation to update the statements contained in this presentation, unless required by law. The English language version of this document is leading.

A more comprehensive discussion of the risk factors affecting DSM’s business can be found in the company’s latest Annual Report, which can be found on the company's corporate website, www.dsm.com

Overview

• Dynamics of the animal nutrition industry• Growth through differentiation and global reach • Adding a new ingredients category: Tortuga

GDP and population drive protein consumption

Strong growth drivers propel animal nutrition

• Growing populations and demographic changes

• Increased meat & milk consumption in High Growth Economies

• The need for higher quality ingredients and healthy eating

• Increasing public concern about quality and call for stricter regulation on food safety

• High/more productive genetics

• Cost of feed /grains

Source: FAO: The State Of Food And Agriculture

Serving a highly efficient protein value chain

ActiveIngredients

CompoundFeed Farmer Meat/dairy

Processor

Commodity market products from food and

fuels

Active ingredient producers

VitaminsMineralsEnzymes

CarotenoidsHealth products

Others

Premix & Macro blends producers

Full range feed producers (premix, specialties and compound feed)

Compound feed producers

Farmers

Home-mixing farmers

Vertically integrated producers

Meat slaughtering & processing

Dairy processing

Nutritional consultancy & services

Forms & delivery systems

PremixMacroBlends

Increased value in feed efficiency

Grain prices driven by • Drought in the middle west of the USA

& South of Brazil• Increasing soya and corn demand in

China

Short term impact on animal producers• Cash focus due to reduced margin• Focus on alternative raw materials &

utilization of feed ingredients• Animal culling and/or less lodging• Intensified focus on feed conversion• Meat prices correction

Mid term impact on consumer• Less meat supply• Higher meat prices

75%

100%

125%

150%

jan feb mrt apr mei jun jul aug sepIn

dexe

d gl

obal

pric

es

Corn Wheat Soybean

Steep price development (2012 YTD)

Jan Feb Mar Apr May Jun Jul Aug Sep

Trends and opportunities for Animal Nutrition

Raw Materials • Higher feed prices expected for the long

term

• Change in global weather patterns, crop yields and bio-fuel demands affecting feedstuff price

Implications for animal protein production• Shorter production cycle to react faster on

volatility

• Integration/consolidation of production

• Drive to reduce cost and increase productivity

• Focus on using more alternative protein sources

• Genetics

Different production cycle per species

Beef (feedlots) 14 months

Beef (pasture) 8-24 months

Pork 5.5 months

Poultry 5-6 weeks

Salmon 14-24 months

Feed additives and premix offer animal nutrition solutions

Overview

• Dynamics of the animal nutrition industry• Growth through differentiation and global reach • Adding a new ingredients category: Tortuga

Nutritional additives: fast growing feed segment

€ 7.5bn (2011) nutritional additives market

• Most relevant markets are carotenoids, vitamins, enzymes & organic trace minerals

• Average market growth is 2-4%

Main contributing profitable growth elements

• Expansion of the premix network• Demand from High Growth Economies• Value over volume strategy• New innovative products• Acquisitions & alliances

Outgrowing the market

Strong global position, active in all segments

Poultry• Efficiencies and feed conversion rates

Swine• Drive to increase productivity & reduce

production cycle to react faster to industry volatility

Aquaculture• 50% of all fish consumption • Strong growth in all sectors and consolidating

Ruminant• Dairy business growing faster in High Growth

Economies• Beef continues to grow

Sales distribution in segments(excl. Tortuga)

Foundation of Differentiation and Growth

Full Value Chain Player

Broa

d pr

oduc

t po

rtfo

lio

Delivery SystemsActive ingredients Blends & Premix

Quality, Reliability, Traceability, Sustainability

Vitamins

Carotenoids

Enzymes

Nutritional Lipids

Nutritional ingredients

Personal care ingredients

• Chemistry• Fermentation

Stability / Shelf Life

Delivery / Solubility

Bio-availability

Powder / Flow Properties

• Spray drying• Encapsulation• Absorption

Custom Formulation

Dilution

3rd party ingredients

•Logistics• Sourcing• Blending

Broadest range of ingredients in the industry

DSM animal nutrition brands in product categories

Vitamins Carotenoids Enzymes Eubiotics

ROVIMIX® portfolioROVIMIX® Hy.D

OVN

CAROPHYLL® RedCAROPHYLL® YellowCAROPHYLL® Pink

RONOZYME® PRONOZYME® VPRONOZYME® WX

RONOZYME® ProActRONOZYME® AROXAZYME G2Enzyme blends

VevoVitall®Cylactin®

Crina® Poultry PlusCrina® Ruminant

Crina Swine

Specialties

ROVIMIX® B-CROVIMIX® Biotin

RONOZYME® RumiStarCAROPHYLL® Pink

ROVIMAX™ NXVevodar®

ROVIMAX™ NXMicroSource S

Vevodar®Microganics

Organictrace

minerals

Fosbovi

Premix

ROVIMIX® portfolioOVN

Animal nutrition solutions address market needs

Product marketability

Productionrequirements

Cost / Efficiency

Food safety /health aspects

Market needs DSM solution

• Enzymes, eubiotics, vitamins

• Premix

• Enzymes, organic acids

• OVN premix all species

• Concepts for production animals

• Vitamins, carotenoids impacting meat quality & food appearance

• Poultry & aqua specific concepts

• Best performance with OVN premix

• Quality for Life™: quality, traceability, reliability, sustainability

• Feed conversion

• Growth and health

• Feed cost, food production cost

• Environment and waste

• Animal welfare & hygiene

• Differentiated products

• Food quality

• Shift to poultry meat & fish

• Avoidance food scarcity

• No issues: Peace of Mind

Nutritional consultancy &

services

Global premix network (42) for local marketsEurope (13)

• Isando, S. Africa

Africa (1)

• Cambridge, Ontario• High River, Alberta• Jefferson, Georgia• Ft. Worth, Texas• Ames, Iowa

North America (5)

• Guadalajara, Mexico• Guatemala City, Guatemala• San Jose, Costa Rica• Caracas, Venezuela• Bogota, Columbia• Quito, Ecuador• Lima, Peru• Puerto Mont, Chile• Montevideo, Uruguay• Buenos Aires, Argentina• Sao Paulo, Brazil• Pecem, Brazil

Latin America (12)

China (5)

• Xinghou, China• Shandong, China• Hunan, China• Jilin, China • Sichuan, China

• Belfast, Northern Ireland• Heanor, UK• Deinze (2), Belgium• Madrid, Spain• Milan & Fidenza, Italy• Mszczonow, Poland• Lysia, Greece• Istanbul, Turkey• Ujhartyan, Hungary• Chelny, Russia• Bucharest, Romania

• Bangkok, Thailand• Ho Chi Min City, Vietnam• Ambernath, India• Poseung, South Korea• Shizuoka, Japan• Wagga Wagga, Australia• Philippines (project)

Asia Pacific (6)

ANH R&D centers to strengthen nutritional solutions

Animal Research Centers

• Established in EU

• Planned in other regions (Asia, LatAm)

To advance nutrition advisory services

• Expand (clinical) science

• Expand applied animal nutrition for claims

support

ANH R&D Center Bazhou, China

(artist’s impression)

Animal Nutrition & Health: driving growth & value

• Strategic actions for further growth

• Increase penetration in swine & ruminant segments

• Expand DSM’s proprietary portfolio to solidify our position as global micro-nutrition leader

• Continue to strengthen the ANH global premix network

• Capture greater value from the value chain by enhancing our business model

• Continued growth and strengthening of our portfolio through innovation

• Enhance our capabilities to create nutritional solutions (nutrition advisory services)

Overview

• Dynamics of the animal nutrition industry• Growth through differentiation and global reach • Adding a new ingredients category: Tortuga

Tortuga, leader in supplements for ruminants

Financials• 2012 expectations:

Net sales ~ € 385m and EBITDA ~ € 60m

Privately held Brazilian company• Leading company in nutritional supplements with

focus on pasture raised beef and dairy cattle• HQ in Sao Paulo, 1200 employees• 3 production locations • Vast and exclusive agent network (> 1000)

Market positions• Global market leader in nutritional supplements to

ruminant/beef cattle with ~12% market share globally(~30% in Latin America)

• Integrated production of key active ingredients:– #2 globally in organic trace minerals

(minerals bound to chelating agent) – Di-Calcium Phosphates (DCP’s) for captive use

• Strong technology, application and performance know-how

Tortuga locations in Brazil

HQProduction

São Vincente

Pecém

MairinqueSão Paulo

Tortuga extends reach in the value chain

Tortuga, a leader in nutritional supplements for ruminants

• Successful, growing business, tremendous strength and reputation

• Enhancing our strength in ruminants where we are currently under-represented

• Extending our customer base beyond Integrators and Co-ops

• Enhancing our core product portfolio: organic trace minerals, DCP

• Entering nutritional supplements for ruminants

• Strengthening our presence in Brazil, which is emerging as the major meat producer in the global market

Forms & delivery systems

Active ingredients Premix Macro blends

Nutritional consultancy &

services

Tortuga – key synergies

• Deep ruminants knowledge

• Increase the vitamin levels included in the Nutritional Supplements– Vitamin A & E – Biotin

• Premix plant footprint Optimization

• Innovation sales– Rumistar– HyD Ruminant – Rovimix B-carotene– Crina Ruminants

• Ideal platform for ‘Clean Cow’

• Roll out organic trace minerals sales for ruminants & monogastrics globally

• Selective roll out of Tortuga model (B2F) in Latin America, China, India and Russia

Well positioned for further profitable growth

• The animal nutrition market continues to grow as GDP and population growth drive protein consumption

• Our broad presence in the value chain offers many opportunities to grow our animal nutrition business by

– using our global reach, product portfolio, and nutritional knowledge base,

– offering nutritional solutions for all animal species according to local requirements

– extending our presence to nutritional services creating additional value for the existing portfolio

– increasing our presence in the ruminants nutrition market through the unique position of Tortuga

Contact:

DSM Investor RelationsP.O. Box 6500, 6401 JH Heerlen, The Netherlands

(+31) 45 578 2864e-mail: investor.relations@dsm.com

internet: www.dsm.com

visiting address: Het Overloon 1, Heerlen, The Netherlands